EDITORIAL: Zero room for error in Tito’s new budget
SA’s fiscal challenges are beyond the reach of technical solutions. They are deeply rooted in the ANC’s political choices
Finance Minister Tito Mboweni could hardly have imagined, when he presented the 2020 budget in February, that he’d have to rip it up and be back four months later to table an emergency adjustment budget amid a pandemic.The centrepiece of the special budget, due to be tabled on June 24, will be how Mboweni plans to fund the government’s R500bn Covid-19 relief package. Since the R200bn loan guarantee scheme is fiscally neutral, and a further R130bn will be scraped off existing budgets, only R170bn in new money still needs to be found.But in the context of the huge Covid-19 growth and revenue shock, it is still a vast amount, equal to roughly 3% of GDP.The Unemployment Insurance Fund and external sources will be tapped, SA plans to borrow $4.2bn from the International Monetary Fund (IMF), $1bn from the New Development Bank and $55m from the World Bank, still leaving markets to pick up a large amount of government bonds.The tricky bit is that SA must present the IMF with a credible fisc...
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